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Question 5 Explain Bond Pricing Principle#5 : An increase in yields will result in a smaller bond price change than a decrease in yields of
Question 5
Explain Bond Pricing Principle#5: An increase in yields will result in a smaller bond price change than a decrease in yields of equal magnitude.
a. | This phenomenon occurs because a bond's pricing function is convex rather than linear. | |
b. | This phenomenon occurs when a traditional yield curve is present. | |
c. | This phenomenon occurs because lower yields magnify the discount rate. | |
d. | This phenomenon occurs when the bonds duration exceeds its maturity. | |
e. | This phenomenon occurs because a bond's pricing function is inverse to the yield function. |
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